AP - Canada's economy is suddenly the envy of the world

[The Evil Genius]

I know this might not go over well with a lot of laissez-fair economists here..but it was an interesting read.

Especially about a nearby country that has done it right (apparently) with more regulations.

http://finance.yahoo.com/news/Canadas-economy-is-suddenly-apf-807130582.html?x=0

Canada's economy is suddenly the envy of the world

No financial meltdowns here, Canada boasts, and world leaders want in on the secret

Rob Gillies, Associated Press Writer, On Sunday June 20, 2010, 4:51 pm EDT

TORONTO (AP) -- Canada thinks it can teach the world a thing or two about dodging financial meltdowns.

The 20 world leaders at an economic summit in Toronto next weekend will find themselves in a country that has avoided a banking crisis where others have floundered, and whose economy grew at a 6.1 percent annual rate in the first three months of this year. The housing market is hot and three-quarters of the 400,000 jobs lost during the recession have been recovered.

World leaders have noticed: President Barack Obama says the U.S. should take note of Canada's banking system, and Britain's Treasury chief is looking to emulate the Ottawa way on cutting deficits.

The land of a thousand stereotypes -- from Mounties and ice hockey to language wars and lousy weather -- is feeling entitled to do a bit of crowing as it hosts the G-20 summit of wealthy and developing nations.

"We should be proud of the performance of our financial system during the crisis," said Finance Minister Jim Flaherty in an interview with The Associated Press.

He recalled visiting China in 2007 and hearing suggestions "that the Canadian banks were perhaps boring and too risk-adverse. And when I was there two weeks ago some of my same counterparts were saying to me, 'You have a very solid, stable banking system in Canada,' and emphasizing that. There wasn't anything about being sufficiently risk-oriented."

The banks are stable because, in part, they're more regulated. As the U.S. and Europe loosened regulations on their financial industries over the last 15 years, Canada refused to do so. The banks also aren't as leveraged as their U.S. or European peers.

There was no mortgage meltdown or subprime crisis in Canada. Banks don't package mortgages and sell them to the private market, so they need to be sure their borrowers can pay back the loans.

In Canada's concentrated banking system, five major banks dominate the market and regulators know each of the top bank executives personally.

"Our banks were just better managed and we had better regulation," says former Prime Minister Paul Martin, the man credited with killing off a massive government deficit in the 1990s when he was finance minister, leading to 12 straight years of budget surpluses.

MORE AFTER LINK

[zoony]

I guess the world needs to transform overnight into an oil, timber, coal, and metals exporter.

That might be tough for the folks in Ireland. And it might undo about 150 years of progress in the US. But, stable it would be. (after about an 80% decline in the size of our economy of course)

That said, I do envy the trust that Canadian citizens put in their system of governance. As much as I value American notions of freedom and independence, it can be a real cluster**** in the way of progress most of the time.

[The Evil Genius]

Well, we do export 2-3x the amount of oil as Canada.

So what's our excuse?

[Mr. Sinister]

Congrats to them.

And BTW, Toronto has some pretty hot chicks over there.

[zoony]

Well, we do export 2-3x the amount of oil as Canada.

So what's our excuse?

per capita?

[TD_washingtonredskins]

Congrats to them.

And BTW, Toronto has some pretty hot chicks over there.

So does Montreal!

[The Evil Genius]

per capita?

Of course not. :evilg:

[The Evil Genius]

Congrats to them.

And BTW, Toronto has some pretty hot chicks over there.

You should see the ones in Vancouver.

[Hubbs]

I'm one of those laissez-faire economists, but I pretty much agree with this article. We thought we could get away with allowing banks to maintain absurd leverage ratios. Canada didn't. And, as mentioned in the article, Canada requires more direct ties between borrowers and lenders. I don't even think these issues are debatable at this point - Canada was right, and we were wrong.

(That doesn't mean that any given banking regulation is good or bad. The article is a bit disingenuous with the simple assumption that "more regulated" equals "better." Well, no. Some regulations are important and necessary, and some cause more problems than they solve.)

[The Brave Little Toaster Oven]

I guess when Canada went on strike and got all that internet money, it helped their economy...weird.

[The Evil Genius]

Cues post(s) about taxation in Canada...in 3, 2, 1....

Yes, they pay a lot. A ****load for alcohol and tobacco too.

[Hubbs]

I guess when Canada went on strike and got all that internet money, it helped their economy...weird.

I'm guessing that around 90% of the people who see this will have absolutely no idea what you're talking about, which makes it even better. Obscure references = hysterical.

[Hubbs]

Cues post(s) about taxation in Canada...in 3, 2, 1....

Yes, they pay a lot. A ****load for alcohol and tobacco too.

That doesn't really have anything to do with capital ratios or lending practices.

[JimboDaMan]

I'm one of those laissez-faire economists, but I pretty much agree with this article. We thought we could get away with allowing banks to maintain absurd leverage ratios. Canada didn't. And, as mentioned in the article, Canada requires more direct ties between borrowers and lenders. I don't even think these issues are debatable at this point - Canada was right, and we were wrong.

(That doesn't mean that any given banking regulation is good or bad. The article is a bit disingenuous with the simple assumption that "more regulated" equals "better." Well, no. Some regulations are important and necessary, and some cause more problems than they solve.)

It doesn't say that all regulations are good, it says good regulations are better than no regulations. I realize one sentence says "The banks are stable because, in part, they're more regulated". But read it in context. That's in comparison to how the US deregulated and allowed abuses to run rampant.

[ACW]

I'm guessing that around 90% of the people who see this will have absolutely no idea what you're talking about, which makes it even better. Obscure references = hysterical.

I did

I had to wiki it to double-check it though.

[DRSmith]

Don't smoke, don't drink much so it is all good

Oh an I am rolling in internet money

[Hubbs]

It doesn't say that all regulations are good, it says good regulations are better than no regulations. I realize one sentence says "The banks are stable because, in part, they're more regulated". But read it in context. That's in comparison to how the US deregulated and allowed abuses to run rampant.

I know, I just wanted to be clear since it seems that so many of these threads turn into "Regulation good!" versus "Regulation bad!"

[The Evil Genius]

That doesn't really have anything to do with capital ratios or lending practices.

However, it might explain a good bit of why they have had, at one time, 12 straight years of budget surpluses.

Proper revenue levels to support spending levels.

[SnyderShrugged]

There are some lessons to be learned from Canada, especially in recent decades.

They regulated banking on mortgages thus, no mortgage meltdown, no subprime crisis. Banks simply can't package mortgages and sell them to the private market.

When it looked like a recession would hit, they cut taxes.

Their prime minister slashed spending in the mid 00's. In fact, In the 1998 budget the government estimated that about 55 percent of the deficit reduction came from economic growth and 35 percent from spending cuts.

Also, they benefit from the lack of moral hazard caused by GSE's, like our own Fed and Fannie and Freddie. If we did not have these institutions, our banks, too, would have been more careful about loans (the way they used to be).

[zoony]

Don't get me wrong, I really do have a ton of respect for the Canadian model in general. But, continuing to play devil's advocate here, would ANY of what they have accomplished be possible without the world's largest economy, strongest military, and closest ally just below them?

None of these things exist in a vacuum. I'm never a fan of people pointing to another country and saying "we should just do what they do".

.......

[DRSmith]

I heard it was gay marriage that kept the economy afloat

[SnyderShrugged]

Don't get me wrong, I really do have a ton of respect for the Canadian model in general. But, continuing to play devil's advocate here, would ANY of what they have accomplished be possible without the world's largest economy, strongest military, and closest ally just below them?

None of these things exist in a vacuum. I'm never a fan of people pointing to another country and saying "we should just do what they do".

.......

I thik you bring up a very valid point. For one thing, they have the luxury of spending a fraction of what we do on defense simply by proximity.

[Chopper Dave]

I guess when Canada went on strike and got all that internet money, it helped their economy...weird.

I'm not your buddy, guy.

[Die Hard]

I thik you bring up a very valid point. For one thing, they have the luxury of spending a fraction of what we do on defense simply by proximity.

Here's a well-known fact

The rest of the world spends a fraction of what the United States does. Period.

[Ryman of the North]

I guess when Canada went on strike and got all that internet money, it helped their economy...weird.

Im not your buddy, Guy!

LOL

I think that for one thing, its harder to get a loan here you really gotta jump through hoops, for another our population density is far less, this means less people to fill jobs.

we are also a constitutional monarchy not a democracy so we dont have retarded people who have big name recognition running the show here. Thats the downfall of democracy, because lets be honest, the AVERAGE JOE is average because he isnt anything special lmao.

I gotta say some of our politicos are asshats but for the most part they are very educated asshats so even if they are crooked, they are smart enough to still do their job (mostly).